GBPUSD is forming a new rising channel on its short-term time frames, and it looks like another test of support is about to take place. Price bounced off the channel top around 1.1660 and is inching close to the 38.2% Fib.

This retracement level lines up with the mid-channel area of interest around 1.1440, which might be enough to keep losses in check. A larger correction could reach the 61.8% Fib near the 1.1300 major psychological support and 100 SMA dynamic inflection point.

On the subject of moving averages, the 100 SMA is above the 200 SMA to confirm that the path of least resistance is to the upside or that support is more likely to hold than to break. In that case, GBPUSD could make its way back up to the swing high or channel top closer to 1.1700 next.

Stochastic is already in the oversold region to signal exhaustion among sellers, so turning higher would mean that buyers are taking over. RSI, on the other hand, has more room to head lower before reaching the oversold region so price could follow suit.

GBPUSD could take cues from the BOE decision lined up later in the week, as the UK central bank might opt to be more aggressive with its tightening moves. The UK economy faces persistent inflation and weak growth, so policymakers might decide to announce a larger rate hike to keep price pressures in check.

Meanwhile, the FOMC decision and NFP report would likely have a huge impact on dollar pairs later in the week. The Fed could hike by another 0.75% and signal scope for more interest rate increases, which would be bullish for the dollar.

However, deciding to scale down their pace of tightening might lead the currency to unwind more of its gains. Also, another slowdown in hiring is eyed, which could cast doubts on future rate hikes.